Online calculator helps investors get back on track

(October 20, 2003) With stock markets recovering, many investors will be breathing a sigh of relief as they open their latest quarterly statements to find positive returns in their mutual fund portfolios. But how long will it take to recoup the heavy losses of the past few years? The Investor Education Fund attempts to answer […]

By Doug Watt | October 20, 2003 | Last updated on October 20, 2003
2 min read
  • Canadians ready to invest, expecting stronger 2004
  • Marketing frontlines: Off the sidelines (from the May 2003 edition of Advisor’s Edge)
  • Clients down on RRSP investing? Remind them about tax savings and other benefits
  • Setting the tone with cautious clients

    To use the calculator, investors enter the original amount when it was invested, what it’s worth now and the rate of return they had aimed for. The calculator will work out the rate of growth needed to get back on track, based on a number of different time frames.

    For example, take a $10,000 investment made in October 2000, now worth $8,000, with an anticipated annual rate of return of 7%. To get back on track by October 2004, the portfolio would need to generate 64% growth over the next 12 months.

    “There’s no question that during the bull market of the late 1990s, many people expected far higher returns than the market could consistently deliver,” says Terri Williams, president of the OSC’s Investor Education Fund. “It may be a real eye-opener when you use this calculator and see what it will take to get your portfolio back on track.”

    If an investment has performed well, the calculator can also show how much less it can earn over the next year and still be on track. “That can ease the stress if your investment has a tough year,” the commission says.

    To try out the OSC calculator, please click here.

    • • •

    For more online investor tools you might like to share with your clients, click here.

    Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca

    (10/20/03)

    Doug Watt

    • (October 20, 2003) With stock markets recovering, many investors will be breathing a sigh of relief as they open their latest quarterly statements to find positive returns in their mutual fund portfolios. But how long will it take to recoup the heavy losses of the past few years? The Investor Education Fund attempts to answer that question with a new online tool: the “getting back on track” calculator, created by financial author Bruce Cohen.

    Although the question appears straightforward, it’s actually a bit complicated. “Many people believe a 20% gain can offset a 20% loss. It doesn’t,” the OSC says. “Losing 20% of a $1,000 investment leaves $800. A 20% gain on $800 adds $160, putting you at just $960. You actually need a 25% gain to get back to $1,000.”

    In addition to accounting for declines in a portfolio, investors need to consider lost growth. For example, an investor may have anticipated a 7% annual rate of return during the bear market years. Both those losses must be taken into account to determine future rates of return needed to meet investment goals.

    R elated Stories
  • Canadians ready to invest, expecting stronger 2004
  • Marketing frontlines: Off the sidelines (from the May 2003 edition of Advisor’s Edge)
  • Clients down on RRSP investing? Remind them about tax savings and other benefits
  • Setting the tone with cautious clients

    • To use the calculator, investors enter the original amount when it was invested, what it’s worth now and the rate of return they had aimed for. The calculator will work out the rate of growth needed to get back on track, based on a number of different time frames.

    For example, take a $10,000 investment made in October 2000, now worth $8,000, with an anticipated annual rate of return of 7%. To get back on track by October 2004, the portfolio would need to generate 64% growth over the next 12 months.

    “There’s no question that during the bull market of the late 1990s, many people expected far higher returns than the market could consistently deliver,” says Terri Williams, president of the OSC’s Investor Education Fund. “It may be a real eye-opener when you use this calculator and see what it will take to get your portfolio back on track.”

    If an investment has performed well, the calculator can also show how much less it can earn over the next year and still be on track. “That can ease the stress if your investment has a tough year,” the commission says.

    To try out the OSC calculator, please click here.

    • • •

    For more online investor tools you might like to share with your clients, click here.

    Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca

    (10/20/03)

    (October 20, 2003) With stock markets recovering, many investors will be breathing a sigh of relief as they open their latest quarterly statements to find positive returns in their mutual fund portfolios. But how long will it take to recoup the heavy losses of the past few years? The Investor Education Fund attempts to answer that question with a new online tool: the “getting back on track” calculator, created by financial author Bruce Cohen.

    Although the question appears straightforward, it’s actually a bit complicated. “Many people believe a 20% gain can offset a 20% loss. It doesn’t,” the OSC says. “Losing 20% of a $1,000 investment leaves $800. A 20% gain on $800 adds $160, putting you at just $960. You actually need a 25% gain to get back to $1,000.”

    In addition to accounting for declines in a portfolio, investors need to consider lost growth. For example, an investor may have anticipated a 7% annual rate of return during the bear market years. Both those losses must be taken into account to determine future rates of return needed to meet investment goals.

    R elated Stories
  • Canadians ready to invest, expecting stronger 2004
  • Marketing frontlines: Off the sidelines (from the May 2003 edition of Advisor’s Edge)
  • Clients down on RRSP investing? Remind them about tax savings and other benefits
  • Setting the tone with cautious clients

    • To use the calculator, investors enter the original amount when it was invested, what it’s worth now and the rate of return they had aimed for. The calculator will work out the rate of growth needed to get back on track, based on a number of different time frames.

    For example, take a $10,000 investment made in October 2000, now worth $8,000, with an anticipated annual rate of return of 7%. To get back on track by October 2004, the portfolio would need to generate 64% growth over the next 12 months.

    “There’s no question that during the bull market of the late 1990s, many people expected far higher returns than the market could consistently deliver,” says Terri Williams, president of the OSC’s Investor Education Fund. “It may be a real eye-opener when you use this calculator and see what it will take to get your portfolio back on track.”

    If an investment has performed well, the calculator can also show how much less it can earn over the next year and still be on track. “That can ease the stress if your investment has a tough year,” the commission says.

    To try out the OSC calculator, please click here.

    • • •

    For more online investor tools you might like to share with your clients, click here.

    Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca

    (10/20/03)